Perfect Party Company contracts with a customer to provide its birthday party package including a cake, balloons, and musical entertainment. It regularly sells the following products separate at the following standalone selling prices.
Item Standalone Selling Price
Balloons ……………………………..$ 70
Cake …………………………………. 40
Musical Entertainment……………….. 120
Hosting ………………………………. 100
Perfect Party also regularly bundles musical entertainment and hosting together for $ 160. Perfect Party signs a contract with a customer to provide balloons, a cake, musical entertainment and hosting a party for $ 270. Perfect Party determines that each product is a separate performance obligation. How should Perfect Party allocate the transaction price to each product?